Ukraine challenges jurisdiction of Stockholm body to hear retroactive FIT claim by solar generator

Ukraine's Ministry of Justice has reportedly challenged the jurisdiction of the Stockholm Chamber of Commerce to hear a claim made by a solar power plant operator against the state, after Kiev retroactively reduced clean energy feed-in tariff (FIT) payments.

The development emerged after the Ukrainian ministry responded to questions asked by member of parliament Liudmyla Buimister, a member of the nation's ruling Sluha Narodu (Servant of the People) party.

Lithuanian renewables company Modus Energy International BV has lodged an €11.5 million claim against the government of Ukraine after the state reduced clean energy payments by between 2.5% and 15%, from August, to ease financial demands on the public purse.

Modus – which Russian news agency Interfax has previously reported was among renewables companies in Ukraine which did not sign up to the FITs proposal – claims the reduction in payments breaches its rights under the Energy Charter Treaty international agreement to which Ukraine and Lithuania are both signatories.

The case is due to be heard at the Stockholm business group but the Ministry of Justice told MP Buimister it is challenging that tribunal's jurisdiction to hear the case. A copy of the ministry's response was published by the MP on her Facebook page and pv magazine has seen sections of the reply which were translated by London-based legal and tax consultancy CMS Cameron McKenna Nabarro Olswang LLP.

The ministry response anticipates detailed legal claims and responses in the case will emerge next year and has asked for oversight of all official statements made by Ukrainian officials which relate to the case, in part “to prevent the state budget from suffering losses as a result of losing investment disputes.” The letter continues: “This is especially important now, as the said case is the first one in the ‘green energy' sector and any positive or negative experience may affect arbitration in respect of the future, similar disputes and cases against Ukraine.”

CMS has previously referred to the minutes of a Ukrainian government cabinet meeting which indicated Modus' claim relates to three solar plants in the country with a total generation capacity of 47 MW. The London firm said the renewables business had been hit by the maximum reduction in FIT payments of 15%, which will affect income which had been contractually guaranteed until 2029.

MP Buimister is experienced in legal and industrial matters and in ensuring Ukrainian legislation complies with international agreements. With experience in the wind power sector, she is a member of the Ukrainian parliament's economic development committee and head of its sub-committee for competition policy.

This copy was amended on 24/06/21 after the lawyer representing Modus in the case confirmed the estimated damages concerned are €11.5 million.